Expats moving to Germany will soon notice that both the German tax system as well as social security plans can be rather complex. Both taxation and the welfare state can involve a fair bit of bureaucratic hassle. If the red tape is worth it, well, that’s up to everyone to decide for themselves.
When you move to Germany for professional reasons, you might be surprised after you get a look at your first payslip: your gross monthly income and the net salary you actually receive often differ considerably. For example, in 2012, a childless, single, 37-year-old expat employee living in western Germany would earn a gross salary of €5,000 a month; but they would only get back around €2,875 after PAYE taxes. However, this difference isn’t due to taxation alone: some contributions for social security schemes are directly deducted from most employees’ wages in Germany. The country still has a fairly extensive welfare state, though recent reforms to cut both costs and benefits sparked various heated debates in the media. The German social security system as well as local taxation sometimes involve quite a bit of red tape. If you’re lucky, the financial advantages will outweigh the hassle, though.